The Highly Affected Sectors Credit Availability Program (HASCAP): A further COVID-19 relief measure for businesses

February 12, 2021 | Jenna Zaleski, Amanda Robertson, Kenneth R. Rosenstein

As the COVID-19 pandemic continues to take a toll on the Canadian economy, many continue to need additional financial relief to help them survive the negative impact of the pandemic on their business and their corresponding cash flow. By now we are familiar with the financial support and lending programs that have been introduced by the federal government over the course of 2020, including: the Canada Emergency Business Account Program, the BDC Co-Lending Program, the EDC Loan Guarantee Program, and BDC Working Capital Loan Program.

In response to the continuing need of Canadian businesses for further financial relief, the federal government has announced the implementation of the Highly Affected Sectors Credit Availability Program (HASCAP). As of February 1, 2021, HASCAP will be available to provide additional support to highly affected businesses that were otherwise financially viable and stable prior to the pandemic and have subsequently experienced a 50% or greater decline in revenue.

Under HASCAP, Business Development Bank of Canada (BDC) will provide a guarantee of up to $1 million, with the restriction that the loan funds will be used solely for a Canadian business and for such business to continue or resume Canadian business operations. As with the other federal financial relief programs, Canadian businesses will be required to meet certain eligibility criteria in order to qualify for the HASCAP. Such eligibility requirements include that the business must be Canadian-based, must have been financially stable and viable prior to COVID-19, and must meet one of the following criteria:

  1. received payments from either the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) by demonstrating at least a 50% decline in revenue for at least three months, consecutively or non-consecutively, within the eight months preceding the HASCAP application;
  2. if the business qualifies for one or both of the CEWS or CERS programs, but has not received any benefit, the business must apply for the CEWS or CERS program prior to applying for HASCAP; or
  3. if the business does not qualify for CEWS or CERS, it must provide financial statements that prove that the business has suffered a year-over-year revenue decrease of at least 50% monthly for at least three months, consecutively or non-consecutively, within the eight months preceding the HASCAP application.

The calculation of the drop in revenue for the first two criteria will be the same as the calculation used for the CEWS and CERS program, which can be found at the Government of Canada website. We note that there is still some uncertainty as to how the revenue drop in the third criteria will be calculated to meet this eligibility requirement.

To apply, a business must contact its primary financial institution and a business cannot apply at more than one financial institution. The HASCAP program is currently expected to be available until June 30, 2021.

For further information on the HASCAP program and the eligibility criteria, visit the BDC website or contact our office to see if the HASCAP program or another federal financial lending program could support your business.

 

Sources:

Government of Canada: Decisive and Dynamic Support for Canadians

Government of Canada: Minister Ng announces launch of Highly Affected Sectors Credit Availability Program

BDC: Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee

Office of the Superintendent of Financial Institutions: OSFI determines capital treatment of federal program supporting highly affected sectors 

Retail Council of Canada: Highly Affected Sectors Credit Availability Program (HASCAP) announced

Disclaimer

This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

Miller Thomson LLP uses your contact information to send you information electronically on legal topics, seminars, and firm events that may be of interest to you. If you have any questions about our information practices or obligations under Canada's anti-spam laws, please contact us at privacy@millerthomson.com.

© 2021 Miller Thomson LLP. This publication may be reproduced and distributed in its entirety provided no alterations are made to the form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may be requested by contacting newsletters@millerthomson.com.